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An economist's view of the implications of Tervita Corp v. Canada (Commissioner of Competition)

In a January 2015 decision that is likely to have significant implications for future Competition Act proceedings, the Supreme Court set out a procedure for the assessment of efficiency gains in merger review cases and the responsibility of the Commissioner of Competition to quantify consumer losses. The decision provides clarity regarding the relative balancing of consumer losses from lessened competition with efficiency gains benefiting merging parties.

Background

Section 96 of the Competition Act allows for the approval of mergers causing consumer losses due to lessening of competition in the event that efficiency gains (for example, economies of scale) offset these losses. The court noted the two methods have been employed to date to evaluate these efficiencies under Section 96: The total surplus standard, and The balancing weights standard.

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